Store finance deals buying guide

01.Introduction

Joanne wished she’d paid closer attention to the fine print in her store finance contract when she was debited more than six monthly payments after her two-year lease payment term ended.

The problem was she forgot to notify the finance company when she moved house and to contact the company at the end of her payment term — if she had, she probably could have bought the item for less than the hundreds of dollars she forked out in extra lease payments.

George also got a shock when, too late, he calculated the finance deal he’d signed up for was costing him somewhere between 30% and 50% more than the price of his new TV.

Store credit deals are lucrative for finance companies and can be profitable for retailers too, but for consumers they’re a real mixed bag. Some provide good value if used cleverly; others should probably come with a wealth warning. This report compares your options and highlights what to watch out for when you’re out and about (maybe treating yourself to a new plasma or LCD TV) this festive season.

Interest-free deals can be just that. But fees can apply — and up to 28% interest if you don’t pay in time.

Consumer leases (often promoted as ‘rental’ agreements) can be expensive and full of traps.

Check and negotiate the item’s cash price first — there’s no point paying too much just because it’s interest-free. You might get a better price for cash.

Please note: this information was current as of November 2006 but is still a useful guide to today's market. For more recent information, see Interest free shopping offers 2011.

18 Sep 2009
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For a merchant, the average cost to process a customer’s MasterCard or Visa credit card payment is less than 1% of the value of the transaction. But some airlines charge much higher fees.